Rules 3 and 4 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 3 lets the Director General grant a special licence to a person whose Importer-exporter Code Number has been suspended or cancelled, having regard to two factors: harm to India's foreign trade if it is denied, and the risk that India fails an obligation under an international agreement. The special licence cannot be transferred. Rule 4 says how a person applies for a licence, certificate, scrip or other instrument: in accordance with the Policy or an Order made under section 3. Rule 3 is as notified in 1993; rule 4 was substituted by the 2015 Amendment Rules. This article explains both as per the Rules as notified in 1993 read with the 2015 Amendment Rules.
Rule 3: if a person's Code has been suspended or cancelled under section 8(1), the Director General may grant a special licence if denial would adversely affect India's foreign trade or the suspension or cancellation would lead to non-fulfilment of an obligation under an international agreement. A special licence is non-transferable. Rule 4: a person may apply for a licence, certificate, scrip or any instrument bestowing financial or fiscal benefits to import or export goods, services or technology in accordance with the Policy or an Order.
Rule 3: special licence
Where it comes from in the Act
Section 8(1) allows the Director General (or an officer he authorises) to suspend or cancel an Importer-exporter Code Number after a notice, a representation and a hearing. Section 8(2) then provides that a person whose Code has been suspended or cancelled "shall not be entitled to import or export any goods or services or technology except under a special licence, granted, in such manner and subject to such conditions as may be prescribed, by the Director General to that person". The words "goods or services or technology" were added in 2010. Rule 3 supplies the part left to the rules: the manner and the conditions. See our article on section 8. If your Code is under a notice of suspension, a licence adviser can help you prepare a request for a special licence alongside your reply to the notice.
What rule 3(1) says
"Where the Importer-exporter Code Number granted to any person has been suspended or cancelled under sub-section (1) of section 8, the Director General may, having regard to the following factors, grant to him a special licence, namely:
(1) that the denial of a special licence is likely to affect the foreign trade of India adversely; or
(2) that the suspension or cancellation of the Importer-exporter Code Number is likely to lead to non-fulfilment of any obligation by India under any international agreement".
Drafting note: the two factors are numbered (1) and (2) inside sub-rule (1), which is unusual numbering. This is a feature of the printed Rules and is kept as printed.
Reading the rule closely:
| Words | What they mean |
|---|---|
| "may" | Granting is discretionary. The Rules do not say the Director General must grant. |
| "having regard to the following factors" | The Director General is to look at the two factors named. |
| "or" between the factors | Either factor is enough on the words printed. |
| "denial ... likely to affect the foreign trade of India adversely" | The test is the effect on India's foreign trade, not on the person alone. |
| "non-fulfilment of any obligation by India under any international agreement" | The test is India's obligation, not the person's own contract. |
Note that the factors look to India's interest. A person's own loss from the suspension is not named in the rule. The rule also does not set a time limit for deciding, or say what documents are to be given with the request; the sources consulted do not supply them either.
Rule 3(2): non-transferable
"The special licence granted to any person under sub-rule (1) shall be non-transferable." It is personal to the person to whom it is granted. Rule 6, on conditions of licences, has its own bar on transfer of ordinary licences; see our article on rule 6.
Rule 3 and the 2015 amendment
The 2015 Amendment Rules did not amend rule 3. The rule still speaks only of a "special licence" and does not repeat the phrase "goods or services or technology" that section 8(2) now uses. The reader should read rule 3 together with section 8(2) as amended. Rule 2(g) (after re-lettering) defines "special licence" as a licence granted under section 8(2); see our article on rules 1 and 2.
Example: Sundial Exports (an invented firm) has had its Code suspended for a period after a notice and a hearing. It is under a contract to supply to a foreign government under an agreement between the two countries. Sundial asks the Director General for a special licence, pointing to the likely non-fulfilment of India's obligation under that agreement. The Director General may grant it, having regard to the factor in clause (2). If granted, Sundial cannot pass the special licence to another exporter.
Rule 4: application for a licence, certificate, scrip or other instrument
The current text
Rule 4 was substituted in 2015. It reads: "A person may make an application for the grant of a licence, certificate, scrip or any instrument bestowing financial or fiscal benefits to import or export goods or services or technology in accordance with the provisions of the policy or an order made under sections 5 and 3 of the Act respectively."
Printing slip: the substituted rule is printed with the number "(4)" in brackets instead of "4". It is flagged here only.
In 1993 rule 4 read: "A person may make an application for the grant of a licence to import or export goods in accordance with the provisions of the Policy or an Order made under section 3." The 2015 rule widens it in three ways:
- from "licence" to "licence, certificate, scrip or any instrument bestowing financial or fiscal benefits";
- from "goods" to "goods or services or technology"; and
- by naming section 5 for the Policy and section 3 for the Order ("respectively").
What rule 4 does and does not do
Rule 4 is short. It says a person may apply, and that the application is made "in accordance with the provisions of the policy or an order". It does not itself set a form, a fee, a time limit or documents. The fee is dealt with by rule 5 (see rule 5). Forms and steps are for the Policy and the Handbook of Procedures, which can change and should be checked in their current text. Under section 9(2), the application goes to the Director General or an officer authorised by him, who may grant, renew or refuse; see section 9.
Who may apply? Rule 4 says "a person". Whether a particular person needs a Code to apply is for the Policy and section 7. A person whose Code is suspended or cancelled can import or export only under the special licence under rule 3.
| Rule | Who | For what | Basis |
|---|---|---|---|
| 3 | A person whose Code is suspended or cancelled | A special licence under section 8(2) | Director General's discretion, two factors |
| 4 | A person | A licence, certificate, scrip or other instrument | The Policy or an Order under section 3 |
The link with section 3(4)
The 2010 Amendment Act inserted section 3(4): no permit or licence shall be necessary for import or export of any goods, nor shall any goods be prohibited, "except, as may be required under this Act, or rules or orders made thereunder". That is why an application under rule 4 arises only where the Act, the rules or an Order require a licence or other instrument. See our article on sections 3 and 4.
The Policy in the background
For what the Policy says, read the current Foreign Trade Policy. Policy provisions can change; check the current Policy.
Need help with a licence application?
Whether you are applying for a licence or an authorisation under the Policy, or you need a special licence after a suspension, our restricted items import-export licence service can help you check the route and prepare the application. Later amendments to the Act, the Rules and the Policy should be checked.
Key takeaways
- Rule 3 lets the Director General grant a special licence to a person whose Importer-exporter Code Number has been suspended or cancelled under section 8(1).
- The Director General has regard to two factors: adverse effect on India's foreign trade, or non-fulfilment of an obligation by India under an international agreement.
- A special licence is non-transferable (rule 3(2)). Rule 3 was not amended in 2015.
- Rule 4, substituted in 2015, lets a person apply for a licence, certificate, scrip or any instrument bestowing financial or fiscal benefits for goods, services or technology, in accordance with the Policy or an Order.
- Rule 4 sets no form, fee or time; the Policy and the Handbook must be checked.
Read next
- Rule 5: application fee, exemptions and refund
- Section 8: suspension and cancellation of the Importer-exporter Code
- Section 9: issue, suspension and cancellation of licence
- Import-export code (IEC) registration guide
Disclaimer: Based on the Foreign Trade (Development and Regulation) Act, 1992 as enacted read with the Amendment Act of 2010, and on the Foreign Trade (Regulation) Rules, 1993 as notified read with the Amendment Rules of 2015, as consulted on 2 October 2026. Later amendments, the current Foreign Trade Policy and the Handbook of Procedures should be checked. This article is general information, not legal advice; check the official text before acting.